Parties Dispute Alleged Defamatory Imputations
DE KAUWE -v- COHEN [No 4] [2022] WASC 35 (16 February 2022)
In dispute are publication of imputations in private and public company correspondence. The defendants deny that each of the publications convey the meanings alleged by Dr de Kauwe. The Court in determining whether national and ordinary meaning of imputations is defamatory of plaintiff, relied upon the Defamation Act 2005 (WA).
Facts:
The plaintiff, Dr de Kauwe, and the first to fifth defendants, Mr Cohen, Mr Saad, Ms Shenhar, Mr Gilboa and Mr Karasik, were directors of eSense Lab Ltd (eSense). The sixth defendant, Mr Pamensky, was the company secretary. The seventh defendant, Mr Wright, was an advisor to a company that provided media and investor relations services to eSense. Between 5 February and 21 March 2018, several letters, notices, emails and ASX announcements were published which Dr de Kauwe alleges defame him.
Dr de Kauwe alleges that each of the defendants published at least one of the publications. The first to fifth defendants admit that they published some but not all the publications. Mr Pamensky and Mr Wright deny that they published any of the publications. Each of the defendants deny that each of the publications conveys the meanings alleged by Dr de Kauwe, and in some instances do not admit that the publications are of and concerning Dr de Kauwe.
The first to fifth defendants plead that each of the publications was on an occasion of common law qualified privilege in that the defendants had a duty or interest in making the communication and the recipients had an interest in receiving the communication, that two of the publications are privileged as replies to an attack and the defence of qualified privilege applies to all the publications.
Mr Pamensky and Mr Wright say that if they published any of the publications, they published the matters complained of on an occasion of qualified privilege. Dr de Kauwe claims he has suffered loss and damage because of the defamatory publications and claims damages, aggravated damages and special damages. Dr de Kauwe also claims that two of the publications were false statements of and concerning his business as a director of a listed public company and a corporate advisor and claims damages, including exemplary damages, for the tort of injurious falsehood.
Issues:
I. Whether or not the national and ordinary meaning of imputations are defamatory of plaintiff.
II. Whether or not the defendants participated in publication and republication.
III. Whether or not the publications constituted a reply to attack.
IV. Whether or not the conduct of defendants are improper, unjustifiable, or lacking in bona fides.
V. Whether or not the damage was amplified via 'grapevine effect'.
VII. Whether or not exemplary damages are necessary.
Applicable law:
Adam v Ward [1917] AC 309 - provides that a court should not be quick to find evidence of malice in the terms of defamatory material published on a privileged occasion because so to do would restrict considerably, if not defeat, the protection which the law confers on privileged communications.
Ahmed v John Fairfax Publications Pty Ltd [2006] NSWSC 11 - authority to argue that the plaintiff cannot rely on publication of material on the internet as proving publication, and that there is no standing presumption that material appearing on the internet has been published.
Al Almoudi v Brisard [2006] EWHC 1062 (QB); (2007) 1 WLR 113 - provides that the plaintiff must plead and prove that the material of which complaint is made has been accessed and downloaded.
AMI Australia Holdings Pty Ltd v Fairfax Media Publications Pty Ltd [2010] NSWSC 1395 - provides that unlike in defamation, in injurious falsehood malice is also an essential element of the cause of action, to be proved by the plaintiff.
Australand Holdings Ltd v Transparency & Accountability Council Inc [2008] NSWSC 669 - where McCallum J observed that there does not seem to be any relevant distinction between the concept of publication for the purpose of defamation and for the purpose of injurious falsehood.
Badenach v Calvert [2016] HCA 18; (2016) 257 CLR 440 - where a solicitor was instructed to prepare a will which gave the entirety of the estate to Calvert, whom the testator had treated as his son.
Bashford v Information Australia [2004] HCA 5; (2004) 218 CLR 366 - provides that the court must 'make a close scrutiny of the circumstances of the case, of the situation of the parties, of the relations of all concerned and of the events leading up to and surrounding the publication'.
Bauer Media Pty Ltd v Wilson [2018] VSCA 154; (2018) 56 VR 674 - the first time in Australia that economic loss damages in defamation were assessed on a loss of chance or a loss of opportunity basis.
Bellino v Australian Broadcasting Corp [1996] HCA 47; (1996) 185 CLR 183 - provides that at common law, privilege only attaches to those defamatory imputations that are relevant to the privileged occasions.
Brown v New South Wales Trustee and Guardian [2012] NSWCA 431; (2012) 10 ASTLR 164 - provides that a mere mechanical comparison of probabilities independent of a reasonable satisfaction will not justify a finding of fact.
Bryanston Finance Ltd v De Vries [1975] 1 QB 703 - provides that the communication by a company director to another director or officer of information concerning maladministration, incompetence and possible dishonesty in management of the the company or information about staffing matters may be a communication on an occasion of qualified privilege.
C Evans & Sons Ltd v Spritebrand Ltd [1985] 1 WLR 317 - his Honour noted (in a context of alleged copyright infringement by a company) that 'a director of a company is not automatically to be identified with his company for the purpose of the law of tort, however small the company may be and however powerful his control over its affairs'.
Carney v Newton [2006] TASSC 4 - provides that the plaintiff will not succeed merely by establishing that his or her case is more likely than the defendant's. The plaintiff must show that his or her case is more likely than not.
Cassell & Co Ltd v Broome [1972] UKHL 3; [1972] AC 1027 - provided that not merely can [the plaintiff] recover the estimated sum of his past and future losses, but, in case the libel, driven underground, emerges from its lurking place at some future date, he must be able to point to a sum awarded by a jury sufficient to convince a bystander of the baselessness of the charge.
Chase v News Group Newspapers Ltd [2002] EWCA Civ 1772; [2003] EMLR 11 - where his Honour identified three types of defamatory allegation: broadly, (1) the claimant is guilty of the act; (2) there are reasonable grounds to suspect that the claimant is guilty of the act; and (3) there are grounds to investigate whether the claimant has committed the act.
Cush v Dillon [2011] HCA 30; (2011) 243 CLR 298 - provides that the inquiry which precedes that of actual malice is undertaken in order to determine the boundaries of the privilege, by reference to the duty or interest which gave rise to it.
Douglas v McLernon [No 3] [2016] WASC 319 - where the plaintiff sought to hold Ms Fitzgerald responsible for material on a website on the ground that she had been a director of the company that sold the domain name or designed the website on which the material was published.
Drummoyne Municipal Council v Australian Broadcasting Corporation (1990) 21 NSWLR 135 - provides that any attribution of an act or condition to a person is capable of both further refinement and further generalisation.
Fairfax Media Publications Pty Ltd v Voller [2021] HCA 27; (2021) 392 ALR 540 - provides that the liability of a person as a publisher depends upon mere communication of the defamatory matter to a third person.
Favell v Queensland Newspapers Pty Ltd [2005] HCA 52; (2005) 221 ALR 186 - provides that a mere statement that a person is under investigation, or that a person has been charged, may not be enough to impute guilt.
Flood v Times Newspapers Ltd [2012] UKSC 11; [2012] 2 AC 273; [2012] 4 All ER 913 - provides that a statement that a person is being investigated by the police or prosecution agencies may convey no more than that there are reasonable grounds to suspect that the person is guilty, or that there are reasonable grounds for investigating whether the person is guilty.
Gacic v John Fairfax Publications Pty Ltd [2005] NSWSC 1210 - provides that it might be possible to bring a claim in injurious falsehood, where the 'statement' relied on was not express but should be implied or inferred from what was said.
Gray v Motor Accident Commission [1998] HCA 70; (1998) 196 CLR 1 - provides that exemplary damages recognise and punish fault, but not every finding of fault warrants their award.
John v MGN Ltd [1997] QB 586 - provides that the more closely the defamation touches the plaintiff's personal integrity, professional reputation, honour, courage, loyalty and the core attributes of his personality, the more serious it is likely to be.
Analysis:
In urging an attack, Mr Cohen was not urging physical violence against Dr de Kauwe, and by referring to war, Mr Gilboa and Mr Cohen were not referring to a state of armed conflict. From the context in which Mr Cohen used the word 'attack' and from the surrounding circumstances that by 'attack', he meant to take action to hurt or damage Dr de Kauwe's standing amongst shareholders. As the purpose of a war is to beat the enemy, Mr Gilboa and Mr Cohen were striving to gain an advantage or victory so that they could obtain full control of eSense and get rid of Dr de Kauwe and Otsana as a challenge to, or restraint upon, their control.
Any act of participation in the communication of defamatory matter to a third party is sufficient to make a defendant responsible as a publisher. A defendant is generally not responsible for the acts or omissions of third parties. However, a person who repeats a defamatory statement may be held as liable as a publisher, notwithstanding that he is merely repeating another's assertion or that the statement itself is unfounded. Dr de Kauwe pleads that Mr Cohen, Mr Saad and Mr Gilboa authored the 5 February Letter, which was published by Mr Saad to Mr Megson and Mr Pamensky by email sent on 5 February 2018.
Dr de Kauwe further pleads that Mr Saad's publication of the letter to Mr Megson and Mr Pamensky was authorised by Mr Cohen and Mr Gilboa, who are thereby also liable for the publication. Every person who knowingly takes part in the publication of defamatory matter is liable in respect of that publication. A person who authorises or ratifies publication by another will be taken to have participated in it.
Whether conduct of defendants improper, unjustifiable, or lacking in bona fides - The 5 February Letter was published by Mr Saad to all the eSense directors and to members of eSense's Australian and Israeli legal teams. A phenomenon of defamation is the grapevine effect. The letter, or its contents, will likely spread beyond those to whom it was sent. Indeed, Mr Gilboa sent the 5 February Letter to Mr Sormann. Similarly, the 15 February Letter was sent not only to the eSense directors and company secretary, but also to Mr Casper, Mr Brownstein, Ms Powers, Mr Hake, Mr Friedman, Mr Kaplansky, Mr Rosenthal, Mr Yosef, Mr Michael, and Mr Segal.
The defendants' conduct in publishing the ASX Announcements and the Letter to ASX was in contumelious disregard of Dr de Kauwe's rights and warrants. Dr de Kauwe would suffer economic loss as the natural and ordinary consequence of publishing the ASX Announcements and the Letter to ASX. By reason of those publications, he has suffered economic loss as pleaded in his plea that he has suffered special damages in his defamation claim. The defendants published the ASX Announcements and the Letter to ASX with malice in the circumstances pleaded and particularised in TASOC.
Conclusion:
The Court concluded that as to the following:
1. 5 February Letter: Mr Saad is liable to Dr de Kauwe in defamation for publishing the 5 February Letter. The Court assess damages of $10,000.
2. 5 February Notice: Dr de Kauwe has not established that any of the defendants are liable to him in defamation for publishing the 5 February Notice.
3. 15 February Letter: Mr Cohen is liable to Dr de Kauwe in defamation for publishing the 15 February Letter. The Court assess damages of $20,000.
4. 23 February Email: Dr de Kauwe has not established that any of the defendants are liable to him in defamation for publishing the 23 February Email.
5. 8 March Email: Dr de Kauwe has not established that any of the defendants are liable to him in defamation for publishing the 8 March Email.
6. 9 March Email: Dr de Kauwe has not established that any of the defendants are liable to him in defamation for publishing the 9 March Email.
7. First ASX Announcement: All the defendants, except Mr Wright, are liable to Dr de Kauwe for publishing the First ASX Announcement. The Court assess ordinary compensatory damages of $40,000 against the first to fifth defendants and Mr Pamensky jointly.
8. Position Letter: Dr de Kauwe has not established that any of the defendants are liable to him in defamation for publishing the Position Letter.
9. Letter to ASX: Dr de Kauwe has not established that any of the defendants are liable to him in defamation in respect of the Letter to ASX.
10. Second ASX Announcement: All the defendants are liable to Dr de Kauwe for publishing the Second ASX Announcement. The Court assess ordinary compensatory damages of $120,000 against all the defendants jointly.
11. The Court assesses aggravated damages of $30,000 against the first to fifth defendants jointly in respect of the First ASX Announcement and the Second ASX Announcement.
12. The Court awards Dr de Kauwe damages for economic loss of $31,500 in respect of loss of fees as a director of eSense for which all of the defendants are jointly liable.
13. The Court awards Dr de Kauwe damages for economic loss of $79,380 in respect of loss of fees as a director of Race Oncology Ltd for which all of the defendants are jointly liable.
14. The Court awards Dr de Kauwe damages for economic loss of $200,000 in respect of loss of the opportunity to receive options to acquire shares in Race Oncology Ltd and to realise the shares for which all of the defendants are jointly liable.
15. Dr de Kauwe has made out the tort of injurious falsehood against each of the defendants but the Court declines to award any damages in respect of that tort.
